B. GUPTA, A.M.: captioned appeals by Revenue and assessee and Cross Objection No. 119 filed by assessee relating to asst. yr. 1979-80 may be conveniently consolidated and disposed of by common order. In appeal by revenue only one ground raised is against order of CIT(A) holding that sum of Rs. 23,694 paid as incentive bonus to officers of assessee s organisation was allowable deduction. As is evident from ground taken, Revenue has filed this appeal mainly on basis that similar relief granted by CIT(A) in case of assessee for asst. yr. 1978-79 had not been accepted and second appeal had been filed by Department in that year. We find from our own order in ITA No. 3604/Del/82 dt. 23rd Feb., 1984 that after considering question of allowability of bonus paid in that year we had come to conclusion that that was allowable deduction from income of assessee. Since facts are similar in this year and since we find that incentive bonus had been paid on grounds of commercial expediency, we shall upheld order of AAC and dismiss Departmental appeal. We shall now take up Appeal No. 1157/Del/83 filed by assessee. Objection is firstly raised against disallowance of Rs. 6,000 being rent for maintenance of guest house at premises bearing No. 85-B, Civil Lines, Bareily where outstation sales representatives had been accommodated from time to time. It was contended before CIT(A) and it is once again contended before us that if guest house had not been maintained assessee would have to bear expense on accommodating outstation sales representatives in hotel and therefore, expenditure was allowable as having been laid out wholly and exclusively for purposes of business. Shri S. K. Gupta, ld. authorised counsel of assessee has relied on decisions in case of CIT vs. Aruna Sugars Ltd. vs. CIT (1980) 123 ITR 619 (Mad) and Saraswathi Industrial Syndicate Ltd. vs. CIT (1981) 24 CTR (P&H) 246: (1982) 136 ITR 361 (P&H) in support of above contention. On other hand Shri K. K. Sharma, ld. Departmental Representative has supported orders passed by ITO and CIT(A). After considering submissions by ld. authorised counsel of assessee and ld. Departmental Representative it appears to us that disallowance had been properly made. decisions of Hon ble Madras and Punjab & Haryana High Court reported as CIT vs. Aruna Sugars Ltd. vs. CIT (1980) 123 ITR 619 (Mad) and Saraswathi Industrial Syndicate Ltd. vs. CIT (1981) 24 CTR (P&H) 246: (1982) 136 ITR 361 (P&H) on which reliance has been placed would not, according to us, apply in favour of case made on side of assessee on account of fact that law had been amended by insertion of sub-s. (4) of s. 37 of IT Act w.e.f. 1st April, 1970. above mentioned two decisions of Hon ble High Courts had been given in asst. yr. 1969-70 when relevant provisions were contained of s. 37(3) of IT Act and in r. 6C of IT Rules. provisions of r. 6C had been omitted as consequence of insertion of s. 37(4) of IT Act, 1961. law having undergone change and fact having been admitted by assessee that accommodation had indeed been used as guest house for various sales representatives of assessee, disallowance of Rs. 6000 has to be upheld. Ground No. 1 in assessee s appeal, therefore, fails. In Ground No. 2 objection is taken to disallowance of following items aggregating at Rs. 60,762 claimed as bad debts: Marwari General Stores, Allahabad Rs. 1,334 Agragauri Agency, Purnea, Bihar RS. 4,634 B. S. Saxena RS. 23,321 Vishnu & Co. RS. 13,878 Srikant Sharma RS. 17,595 RS. 60,762 It is contended by Shri Gupta, ld. authorised counsel of assessee that all conditions laid down in s. 36(2) having been satisfied authorities below had no justification in not allowing claim of bad debts of Rs. 60,762. On other hand learned Departmental Representative has supported orders of ITO and CIT(A). amount of Rs. 1,334 written off in accounts of Marwari General Stores had indeed become bad debt. assessee had sent two reminders to M/s Marwari General Stores and when there had been no response, registered letter had been sent which had been returned as M/s Marwari General and Provisions Stores were not available at given address. In these circumstances, when debtor had become untraceable and when conditions laid down in s. 36(2) of Act had been satisfied, CIT(A) had no justification in disallowing sum of Rs. 1,334 claimed as bad debt. sum of Rs. 4,634 written off in account of Agragauri Agency of Purenea had been rightly disallowed by CIT(A). assessee had sent certain goods to this party in year 1974 but these had been received back as t h e goods supplied were found to be short in quantity and unfit for human consumption. In other words, assessee had suffered loss in year 1974 itself. Deduction, if any, could be claimed in asst. yr. 1975-76 but not in asst. yr. 1979-80 in respect of above loss. In any case sum of Rs. 4634 having not been taken into account for computing income of assessee of any previous year, it was not allowable as deduction as bad debt. rest of debtors mentioned at S. No. 3, 4 & 5 above are made to be belonging to same group. There were certain claims and counter claims between assessee and above mentioned three parties and ultimately matter had been referred to arbitrator. According to CIT(A) claim of matter had been referred to arbitrator. According to CIT(A) claim of bad debts in respect of these three parties was not allowable for two reasons. Firstly, he had found it was on account of loss of stock-in-trade which took place in year 1975. Secondly, CIT(A) found that arbitration award had not been made available to him in order to ascertain as to whether in fact bad debts or loss was allowable deduction in asst. yr. 1979-80. position has remained same before us also. We have also not been shown copy of arbitration award which is said to be not available. finding of fact given by CIT(A) that above mentioned three items were losses of stock- in-trade suffered in year 1975 has also not been controverted by ld. counsel for appellant. In circumstances disallowance of Rs. 23,321, Rs. 13,878 and Rs. 17,595 written off in accounts of debtors at S. Nos. 3, 4 & 5 above had been properly made. Ground No. 2 in assessee s appeal, therefore, stand allowed in part, and assessment is reduced by Rs. 1334. Objection is next taken in Ground No. 3 to disallowance of Rs. 500 which was paid on account of admission fee to Bareilly Club Ltd. It is submitted by ld. counsel that Mr. Stanley, Sales Manager of assessee had been asked to become member of club in interest of assessee s business and admission fee had been paid for that. Since sum of Rs. 500 had been paid on account of admission fee of Mr. Stanley, Sales Manager and since it appears to us to be expenditure incurred for business expediency, we shall allow it. Ground No. 3 succeeds. In Ground Nos. 4, 4.1 and 4.2 objection is taken to finding of CIT(A) by which depreciation had been denied on machinery of value of Rs. 1,99,585. reason why this disallowance was made was similar to reasons which had been given by ITAT in assessee s own case in asst. yrs. 1975-76 to 1978-79. It had been found by ITAT that to certain extent cost of machinery used in assessee s business had been met by some charitable organisation. Depreciation is allowable under provisions of s. 32 r/w provisions of s. 43(1). Since machinery of value of Rs. 1,99,585 did not fall within definition of actual cost within meaning of s. 43(1) of IT Act, CIT(A) was justified in disallowing assessee s claim. We uphold order of CIT(A) for reasons given by us in ITA Nos. 3524 to 3527 decided on 23rd Feb., 1984. Grounds Nos. 5, 5.1 and 5.2 in assessee s petition of appeal have also to be rejected as investment allowance was admissible only on actual cost of machinery and not on that portion of cost which was met by others. It has been mentioned by CIT(A) in his order that to extent of Rs. 1,50,026 cost of machinery had been directly met by this party. In these circumstances assessee was not entitled to any investment allowance on cost of machinery of Rs. 1,50,026 as per provisions contained in s. 32A r/w s. 43(1) of IT Act, 1961. For this reason and for reasons given by us in our order dt. 23rd Feb., 1984 referred to above, we reject Grounds No. 5, 5.1 and 5.2 in assessee s petition of appeal. Ground No. 6 is of general nature and needs no comments. In result appeal filed by assessee is allowed in part. In Cross Objection No. 119 arising out of ITA No. 2107 assessee has merely supported order of CIT(A) allowing deduction of Rs. 23,694 paid as incentive bonus. For reasons given while deciding ITA No. 2107 filed by Revenue, cross objection field by assessee shall stand allowed. In result while appeal by Revenue is rejected cross objection and appeal by assessee are respectively allowed and partly allowed. *** INCOME TAX OFFICER v. SOYA PRODUCTION & RESEARCH ASSOCIATION